Eliminate the Grey Market

[franklee168]

Should this process apply to any luxury product then and not just Rolex?

[Choo Yao Chuen]

That's returning to the pre-2017 days where the grey market was selling at discounts. The good old days.... Sigh.....

[BMWMotoRider]

Originally Posted by 258Pearl

100% of all new Rolex watches are sold at MSRP via an AD.

Everyone buying the piece for the first time pays MSRP.
.

Except for the ones being sold directly out the back door of an AD with an extra envelope of cash.

There have been several ADs shut down for these types of practices.

Also, buying other expensive jewelry to be ok’d to buy a Rolex is in essence paying over MSRP for said Rolex.

I think it is a stretch to say all new Rolexes are bought at MSRP unfortunately.

[waterking]

Why kill what has worked in America for generations? Geez....study the definition of capitalism.

[VogelPhoenix]

Originally Posted by JC316

This is not the way.

[CoveWatch]

There will always be a grey and secondary market whether market prices are above or below msrp.

[VogelPhoenix]

Originally Posted by hambone1983

the grey market IS the market, so we already know what they fetch in the world.

No, the average price at which hot models are sold to the end user is much lower than the "market price" set by grey dealers, and without a solid clue which percentage of watches are flipped/backdoor'd, no one knows what that average price is. Consequently, it's impossible to predict at which price Rolex' ADs could confidently shift 3000 watches a day, year after year.

[ChrisLB1]

Originally Posted by 258Pearl

100% of all new Rolex watches are sold at MSRP via an AD.

Everyone buying the piece for the first time pays MSRP.

Now.... if we only knew what % of those watches were sold to Used Watch Dealers (I don't like calling them "Grays or Greys" because they are not "Gray Markets")

I think if we only knew how many new owners actually kept the watches for themselves vs how many get resold, that could tell us a lot.

I'm guessing most people pay MSRP and keep them, and a small percent sell to the pre-owned market.

It's the folks that can't or don't want to wait, who pay they hefty mark up. Some of these folks paying the premium just do not want to bother with the AD relationship and the wait. They want it for themselves, and they want it now. Understandable.

Others are pure speculators who have no intention of ever keeping and are only out for the price appreciation/investment value.

Hard if not impossible to quantify, but interesting to ponder.

Agree with this 👍👍

[Geckobros]

It looks like this may already be happening?

https://www.rolexforums.com/showthread.php?t=842794

[Fritzli]

https://www.rolexforums.com/showthread.php?t=842978

A good example! No friendship, no limits, just FOMO and greed - but thats human!

[Chewbacca]

Originally Posted by H25B

Pointless thread alert... but whatever.

Allow ADs to set prices wherever they want. All of a sudden there's no "grey market" and just "a market.."

Suddenly we find out what these things are truly worth.

I don’t agree with this because the brand image will suffer from a clean hands and goodwill ‘foundation’ to a highest bidder without a Grey to blame. You also want your margins to be predictable, but I do agree that a overnight 25-50% factory MSRP increase would make more sense than these expected rumored and incremental 2-5% ones which also create a bank run.

Just be done with it and deal with your customers directly as much as possible.

[Tim Plains]

I originally thought the same thing, Rolex only sets an MSRP, ADs can sell for whatever they want, but that probably wouldn't work because each Rolex would likely be auctioned instead of sold, and ADs would probably hoard everything desirable in order to get tomorrow's price.

Outside of hot watches, grey market dealers are a good thing because you often buy watches for far less than retail. I bought a new Omega 300m last year for 30% off, whereas ADs would only do 0% - 10% off. The only real solution to grey market gouging is people need to stop paying over retail, but everyone acts like a 14 year old girl at a Beatles concert when it comes to stainless steel Rolex models, so it won't happen.

[bluestreak]

Originally Posted by 77T

Posting ahead of 1st cup of coffee…but don’t see how it fixes the supply problem.

Also, the “mark to market” pricing would just raise secondary market prices.

For example:
If a buyer got a Platona at $120K+Tax, ($130K) then sells it to a dealer with a minor uplift to $140K and dealer wants a minimum markup to $170K, then the price soars due to demand without new supply.


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This is not how the supply-demand curve or pricing works. If the dealer thought they could get $170K for the watch, he would price it at that today.

[zengineer]

Originally Posted by H25B

Pointless thread alert... but whatever.



Allow ADs to set prices wherever they want. All of a sudden there's no "grey market" and just "a market.."



Suddenly we find out what these things are truly worth.

Riiiiight...because ADs won't play any games with suppy.

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[77T]

Originally Posted by bluestreak

This is not how the supply-demand curve or pricing works. If the dealer thought they could get $170K for the watch, he would price it at that today.

Yes it is how it works in an open system presuming an action raises costs across the board.

Remember OP’s idea was driving up the floor of the price curve by AD’s taking the first cut. It follows that the new price (given the same demand level) would rise across the board for resellers.

The reason it isn’t $170K today is because many dealers would undercut that price point due to their COGS & margin desire.


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[RoRoRo]

Errrrm would kinda kill the brand

[Calatrava r]

There actually isn't a "grey" market for Rolex watches so there is no need to eliminate it. All Rolex watches are retailed through ADs. The watch dealers you see online are "Used Watch" dealers selling pre-owned watches. Many may be in BNIB condition or unworn, but they are still pre-owned, i.e., used. What buyers do with their own property is their own affair and if they want to flip immediately and make a quick buck, such is the world we live in. From what I see most used Rolex for sale are actually a few months older or more. One should expect some selling by lucky retail buyers where the after-market price is so out of whack from MSRP.

[hambone1983]

Originally Posted by VogelPhoenix

No, the average price at which hot models are sold to the end user is much lower than the "market price" set by grey dealers, and without a solid clue which percentage of watches are flipped/backdoor'd, no one knows what that average price is. Consequently, it's impossible to predict at which price Rolex' ADs could confidently shift 3000 watches a day, year after year.

the market price is not "set" by sellers, at least not without a cartel to fix prices (in which case it isn't a market pricing mechanism). It is established by what people are willing to pay for them.

Dealers are required to sell at a fixed price established by Rolex. There is no market pricing mechanism for dealers. Currently these prices are substantially below what the market will bear. If all Rolex watches were made available to the public in true market of competing dealers they would be around what greys are getting, assuming ceteris paribus.

The moderating factor is that the ability to arbitrage between MSRP and market prices goes away, and with it so too do the speculators. To what degree that is distorting the market is anyone's guess.

[Calatrava r]

Originally Posted by samson66

Sort of already happening in stores that sell pre-owned along side new watches. Sell a Daytona to a "customer" and buy it back and sell it pre-owned for 3x the cost.

I suspect this happens more than we know.

[VogelPhoenix]

Originally Posted by hambone1983

If all Rolex watches were made available to the public in true market of competing dealers they would be around what greys are getting, assuming ceteris paribus.

But ceteris are not paribus, as the supply the greys are peddling at their current asking prices is much smaller than the total Rolex supply. No reason to assume equilibrium would be close to current grey prices. I guess we disagree, and it doesn't matter, as I'm 100% sure Rolex is not going this route.

[mikelprz]

At some point, the system will work itself out (sure hope so). Good things come for those who wait.

CAPITALISM

[SuinBruin]

Originally Posted by Calatrava r

The watch dealers you see online are "Used Watch" dealers selling pre-owned watches. Many may be in BNIB condition or unworn, but they are still pre-owned, i.e., used.

By this rationale, everything you've ever bought -- every piece of clothing, every phone, computer, car, heck, every article of food -- was owned by someone before you and was thus, by definition, "pre-owned" and therefore "used." Any "new" Rolex watch has passed through at least two owners (Rolex and the AD) before it gets to the purchaser.

Literally everything that is purchased is "pre-owned," which is why I find that euphemism so hilariously and transparently meaningless. "Owning" and "using" are two entirely different things -- one can own something that one never uses, and one can repeatedly use something that one never owns. "Pre-owned" is just marketing copy.

And in this instance the conflation of using with owning is completely nonsensical. Which watch is "used" in the following hypothetical?

Watch 1: Sold directly from AD to grey dealer. Never removed from packaging, stickers remain on, never tried on, never wound until sold to final purchaser.

Watch 2: Identical to watch 1, except kept by AD and shown in display case where it is repeatedly handled by SAs and tried on and examined by prospective purchasers over the course of many months, including winding and setting, before being sold to final purchaser.

Any rule that leads to the conclusion that Watch 1 is more "used" than Watch 2 is unsound.

[dnd2984]

I agree with you…. Pointless thread.

[Calatrava r]

Originally Posted by SuinBruin

By this rationale, everything you've ever bought -- every piece of clothing, every phone, computer, car, heck, every article of food -- was owned by someone before you and was thus, by definition, "pre-owned" and therefore "used." Any "new" Rolex watch has passed through at least two owners (Rolex and the AD) before it gets to the purchaser.

Literally everything that is purchased is "pre-owned," which is why I find that euphemism so hilariously and transparently meaningless. "Owning" and "using" are two entirely different things -- one can own something that one never uses, and one can repeatedly use something that one never owns. "Pre-owned" is just marketing copy.

And in this instance the conflation of using with owning is completely nonsensical. Which watch is "used" in the following hypothetical?

Watch 1: Sold directly from AD to grey dealer. Never removed from packaging, stickers remain on, never tried on, never wound until sold to final purchaser.

Watch 2: Identical to watch 1, except kept by AD and shown in display case where it is repeatedly handled by SAs and tried on and examined by prospective purchasers over the course of many months, including winding and setting, before being sold to final purchaser.

Any rule that leads to the conclusion that Watch 1 is more "used" than Watch 2 is unsound.

The condition of a watch has nothing to do with whether it is purchased new or used. I have bought new watches from ADs so "shop worn" it was beyond belief. But the watch was still legally a new watch. I have bought watches unworn five years old warranty run, but perfect with plastic on which were "used". What it all boils down to is your name on the warranty card. if it, is you bought new, if some other person's name is on the card or the card was punched (now no names) and the warranty is running, you bought a used watch regardless of its unworn, BNIB, stickers on condition. Items used as demos but never legally sold but thereafter be sold as "new" to the public by the dealer in spite of obvious wear and tear. The true test is does the warranty period commence when you bought the watch. if it does, you bought new watch regardless of its condition. If you bought a watch where the warranty period is already running, you bought a used watch. These are legal concepts defined by law which have nothing to do with condition.

[bluestreak]

Originally Posted by 77T

Yes it is how it works in an open system presuming an action raises costs across the board.

Remember OP’s idea was driving up the floor of the price curve by AD’s taking the first cut. It follows that the new price (given the same demand level) would rise across the board for resellers.

The reason it isn’t $170K today is because many dealers would undercut that price point due to their COGS & margin desire.


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Costs don’t determine price. Supply and demand do. If demand doesn’t change and supply doesn’t change, the market clearing price shouldn’t change. Raising the initial sale price only changes the amount the midddleman gets.

If Rolex is selling at a price where the reseller can’t make a profit, then the reseller isn’t going to buy the watch.


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[xjeeunitx]

why not say just get rid of free market and capitalism?

[JSCP]

Totally not right

[SuinBruin]

Originally Posted by Calatrava r

These are legal concepts defined by law which have nothing to do with condition.

If you could point me to the part of the U.S. Code that defines "new" and "used" for purposes of buying and selling watches, I'd greatly appreciate it.

[Jack T]

Originally Posted by 77T

Posting ahead of 1st cup of coffee…but don’t see how it fixes the supply problem.

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Hello?? There is no supply problem.

[donas]

Sorry, I don't think that would solve much. Either the AD prices them so high the cases stay stocked (very unlikely to reach such a point) or they mark them up to current gray level and sell them. We are still back to the supply/demand problem and the grays will just be marking them up, but starting at a higher level. They gray market will not be eliminated.